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CR-2142

2. Government Accession No.

3. Recipient's Catalog No.

1. Report No. 2. Government Accession No.

NASA CR-aih-2

3. Recipient's Catalog No.

4. Title and Subtitle

Study of Low-Density Air Transportation Concepts

5. Report Date
October 1972

6. Performing Organization Code .

?. Author(s)

H. M. Webb

8. Performing Organization Report No.

10. Work Unit No.

9. Performing Organization Name and Address

The Aerospace Corporation
El Segundo, California

11. Contract or Grant No.
NAS 2-6473

13. Type of Report and Period Covered
Contractor Report

12. Sponsoring Agency Name and Address

National Aeronautics & Space Administration
Washington, D.C.

14. Sponsoring Agency Code

15. Supplementary Notes

16. Abstract

Low density air transport refers to air service to sparsely populated regions. There are two major
objectives. The first is to examine those characteristics of sparsely populated areas which
pertain to air transportation. This involves determination of geographical, commercial and
population trends, as well as those traveler characteristics which affect the viability of air
transport in the region. The second objective is to analyse the technical, economic and operational
characteristics of low density air service. Two representative, but diverse arenas, West Virginia
and Arizona, were selected for analysis: The results indicate that Arizona can support air service

under certain assumptions whereas West Virginia cannot.

1 7. Key Words (Suggested by Author(s) )

Low Density Transportation
Short Haul Transportation
Air Transportation

18. Distribution Statement

UNCLASSIFIED-UNLIMITED

19. Security Classif. (of this report!
Unclassified

20. Security Classif. (of this page)
Unclassified

21. No. of Pages
56

22. Price*
$3.00

* For sale by the National Technical Information Service, Springfield, Virginia 22151

STUDY OF

LOW -DENSITY AIR TRANSPORTATION CONCEPTS

Approved by

Earl R. Hinz

Associate Group Director
Air Transportation Group
Civil Programs Division

Civil Programs Division

iii

ACKNOWLEDGMENTS

This low-density air transportation study, performed for the
Advanced Concepts and Missions Division of NASA, is directed at
finding a solution to the growing rural transportation problems in the
United States. It examines a variety of demographic, economic, and
technical factors which influence the viability of rural air transporta-
tion service. Appreciation is extended to Mrs. Susan Norman, the
NASA Technical Monitor for the study, for her assistance and guidance
provided.

Many members of the technical staff of The Aerospace Corpora-
tion participated in the study. Particular acknowledgment for valuable
contributions is given to:

Richard W. Bruce

(Aircraft characterization, demand matching,

and optimization analysis)

Leon R. Bush

(Arena modeling and demand analysis)

Jon R. Buyan and Daniel J. Cavicchio, Jr.

(Traveler mode choice analysis)

Ralph E. Finney

(Low-density arena demographics)

Joseph A. Neiss and Suzanne C. Miller

(Economics)

CONTENTS

I. INTRODUCTION . . 1

II. STUDY RESULTS 3

IH. LOW -DENSITY ARENA CHARACTERISTICS 5

A. Definition of Low-Density Market 5

B. Regional Characteristics . 6

C. Travel Characteristics 9

D. Arena Selection and Characterization 14

IV. ARENA MODELING 1 7

A. Route Selection 17

1. Nonstop Route Characteristics. 18

2. "Stop-on-Demand" Routes 20

B. City Pair (Route) and Traveler Characteristics* • • • 21

C. Aircraft Characteristics 25

D. Economic Model 29

1. Flyaway Cost 29

2. Direct Operating Cost 29

3. Indirect Operating Cost 33

4. Return on Investment 33

5. Breakeven Fare Requirement . 34

6. Comparison of Operating Costs, Revenues,

and Profits 35

E. Demand Matching Methodology 35

V. AIR SERVICE POTENTIAL 39

A. Nonstop Demand Matching Results 39

1. Representative Nonstop Routes 39

2. Arizona Arena Summary 40

3. West Virginia Arena Summary 42

4. Viable Routes, Aircraft, and Operating

Concepts 44

B. "Stop-on-Demand" Demand Matching Results .... 46

C. System Factors Impacting Economic Viability .... 49

REFERENCES 55

Vll

TABLES

1. Regional Travel Patterns (Percent of Total) 10

2. Low -Density Air Arena/ Hub Cities 13

3. Arena Characteristics Summary 14

4. Comparison of Representative Arenas 15

5. Arizona Total Daily Travel Demand 22

6. West Virginia Total Daily Travel Demand 22

7. Impact of Air Carrier Regulations on Cost 28

8. Avionics Equipment Cost 30

9* Flyaway Cost Summary (In Thousands of Dollars) 30

10. Direct Operating Cost Summary 32

11. Aircraft Operating Profit Requirements 34

12. Comparison of Operating Costs 36

13. Comparison of Operating Revenue /Prof it 36

14. Cessna 402B Evaluation Summary -- Arizona Arena .... 41

15. Aircraft Evaluation Summary -- Arizona Arena 41

16. Cessna 402B Evaluation Summary -- West Virginia Arena. 43

17. Aircraft Evaluation Summary -- West Virginia Arena ... 43

18. City Pair Nonstop Route Viability 45

19- Phoenix-(Willcox)-Ft. Huachuca "Stop-on-Demand"

Results 48

20. Trip Cost Allocation by Percent 51

viii

FIGURES

1. United States Urban Areas 6

2. Major Trading Areas 8

3. Average Area Stage Lengths 8

4. Major Air Hubs 9

5. Air Traveler Characteristics 10

6. Connecting Air Passengers 12

7. Potential Low-Density Air Arenas 13

8. Analytic Approach 17

9- Nonstop Route Concept 18

10. Arizona Arena 19

11. West Virginia Arena 19

12. Scheduled "Stop -on -Demand" Route Concept 20

13. Modal Split Model 23

14. Example of Traveler Characteristics 24

15. Rural Travel Propensity 26

16. Estimated Aircraft Capacity 26

17. Aircraft Block Time 27

18. 1970 Commuter Air Carrier Routes 1 . 31

19- Direct Operating Cost (Cessna 402B) 32

20. Indirect Operating Cost 34

21. Breakeven Fare Requirement 34

22. Demand Matching Optimization 37

23. Nonstop Results: Phoenix-Ft. Huachuca (160 Miles) 39

24. Viable Routes 45

25. "Stop-on-Demand" Example 47

26- Phoenix- Willcox Cessna 402B Sensitivity Study 50

I. INTRODUCTION

Many rural communities today have no rail, bus, or scheduled
airline connections to the governmental, economic, or transportation
centers in their region. This lack of public transportation hampers the
economic development of sparsely settled rural, or "low-density," areas
and contributes to national social and ecological problems by encouraging
the concentration of population and industry in urban areas. Therefore,
the subject of low-density short-haul air transportation is receiving
increasing attention from many federal and state agencies.

12 3

There have been three recent major studies ’ * which highlighted
both the need and the means for implementation of air transportation
service to low-density areas. These studies pointed out the need for service,
the economic problems associated with a low and dispersed demand, and the
need for an air transportation system analysis to study operating system
concepts, equipments, and passenger response to new forms of service.

The National Aeronautics and Space Administration (NASA),
recognizing that jet airplane technology and service has been focused on
high-density areas rather than on rural America, initiated a preliminary
study of low-density short-haul air transportation with The Aerospace
Corporation. The study which is reported herein had the following objectives:

a. To make a preliminary determination of the conditions in

low-density areas under which air transportation service
could be developed and of the potential operating schemes
for satisfying the need.

b- To examine the technical, economic, and operational

characteristics of service in realistic arenas from which
technological problems can be identified and research
objectives formulated.

The study was conducted in two parts: (1) an initial analysis on a

national scale of low-density regions and their relation to air transporta-
tion hubs and regional trading centers, and (2) subsequent detailed

analyses of two selected regions principally contained within the states
of West Virginia and Arizona. These analyses examined demographic
and economic characteristics of the population, available ground trans-
portation, and the desire of travelers for local air transportation
within the region or for connecting service at the air hubs. Airline-
type scenarios were then developed for the 1975 time period to
investigate the economics of providing the required service. A variety
of existing aircraft with capacities of from 5 to 19 passengers was
included in this analysis and various operational modes were considered.
The rural communities studied ranged in population from 2000 to 25, 000
persons and the travel distance between city pairs varied from 60 to
250 miles.

This volume represents a summary of the study. Detailed information
concerning methods, results and assumptions are presented in Reference 14.

II. STUDY RESULTS

This study has identified combinations of arena conditions,
economics, aircraft and operational concepts for the 1975 time period
that could produce economically viable air transportation service in
rural low-density areas (communities up to 25, 000 persons). The
principal conditions under which viable air service becomes possible
are highlighted below:

• City pairs must have stage lengths longer than 60 miles.

• A total two-way travel demand* of at least 200 daily
passengers by all modes is needed.

• One of the cities of the city pair must be both a major
air hub and a major trading center.

• Aircraft capacity must be carefully matched to the route
travel demand. In this study, five to nine passenger air-
craft appeared best suited to the service.

• Aircraft speed as reflected by travel time is one of
the key factors considered by potential travelers in
their choice of travel modes. The speed advantage of
aircraft can be lost, however, if aircraft costs become
excessive.

• Operating strategies counter to current practice or
intuition, such as fare reductions and consequent increases
in demand, can sometimes make unprofitable routes viable
or help reduce the subsidy required to support the route.

• More sophisticated routing concepts, such as stop-on-
demand, show promise of converting otherwise unprofitable
to profitable routes allowing the introduction of air service

to additional communities not able to sustain non-stop service.

* All of the one-way passengers in both directions for all modes of travel.

Although the results of the study are encouraging, additional arenas
with differing characteristics need to be analyzed before a national
assessment of the potential for improved low-density air transportation can
be made.

III. LOW -DENSITY ARENA CHARACTERISTICS

A common definition of low-density markets was developed for
analysis in order to establish a consistent set of low-density travel
characteristics- The best available sets of demographic and traveler
characteristic data with common definitions appear to be the 1970
United States Census of Population^ and the 1967 Census of Transporta-
tion. ^

A. DEFINITION OF LOW-DENSITY MARKET

The population census allows examination of the demographic
and economic characteristics by geographical region as well as by urban
or rural areas, and the transportation census allows definition of the
traveler's characteristics by the same categories. Therefore, the
definition of populated regions was chosen to agree with these standard
census definitions: the Standard Metropolitan Statistical Area (SMSA)
and the Nonstandard Metropolitan Statistical Area (NMSA). The high-
density (urban) market is associated with the SMSA; each SMSA includes
a city of more than 50, 000 population, the county in which the city is
located, and other counties that exhibit strong ties. The low-density
(nonurban or rural) market is the NMSA; the NMSAs include all towns of
less than 50, 000 population in all areas outside of the SMSAs.

Two-thirds of the country's inhabitants live in urban areas and
one-third in rural or nonurban areas. The urban areas are shown in
Figure 1 (shaded areas), along with the four geographical regions
into which the Bureau of Census divides the United States: the West,
South, Northeast, and North Central. These four regions were used to
examine, on a nationwide basis, those demographic and transportation-
related characteristics required for evaluation of the low-density air
market.

Figure 1. United States Urban Areas

B. REGIONAL CHARACTERISTICS

The regional data on population, land area, and population density
were compiled for both the urban and rural areas to allow comparison of
the high- and low-density markets and to identify candidate regions with
predominantly low-density characteristics for subsequent arena selection
and analysis.

Early land trading routes and topography led to the development of
the existing trading regions and trading centers in the United States. Follow-
ing this pattern, the nation became divided into combined cultural and
economic regions that are identified as major trading areas- ^ Each major
trading area has a major trading center (which has the manufacturers or
suppliers that can satisfy the needs for that trading area), several smaller

basic trading centers, and a set of still smaller satellite communities.

The United States has 50 major trading centers and 394 basic trading
centers.

Each major trading area represents a potential rural air arena
for the local (short-haul) traveler, with the major trading center as the
point of attraction. The distance from the major trading center to
the boundary of the major trading area represents the maximum short-
haul travel distance. Travel distances pertaining to these major
trading areas vary as a function of the population densities and the topo-
graphy. The major trading areas and centers are shown in Figure 2
and the average travel distance within the major trading center for each of
the four arena regions are shown in Figure 3.

Another segment of rural travel is the long-distance traveler
whose trip purpose cannot be satisfied by the local major trading center.
To understand the regional characteristics of this portion of travel the

United States air hubs were examined. These have developed in
conformance with the long-distance travel requirements of the country.

An analysis of the number of large, medium, and small hubs and
non-hubs for each of the four regions indicated a trend towards an equal
number of large air hubs in each region. However, the number of
medium and small air hubs varied from region to region (but showed a
correlation with the total population of each region). An examination of
the air service provided at the air hubs showed that all of the large and
most of the medium air hubs (major air hubs) were provided with good
long-haul trunk service, while most of the small and all of the non-hubs
primarily were provided only with local short-haul service. Thus, the
major air hubs (large and medium air hubs) represent a set of potential
air hubs for the rural air traveler. The major air hubs are identified in
Figure 4.

►

SEATTLE

OMAHA O

DES MOINES
O

SAN FRANCISCO/OAKLAND

•SYRACUSE airany 'BOSTON
ROCHESTERq O o

O-) DETROIV-BWALO HARTFORD^PROViDENCE

A J ^nSyork

^ nrvyPiAMn P.TKR.-PGH •PhIlADELPHIA

(Baltimore

•WASHINGTON, O.C.

MILWAUKEE
r

CHICAGl

CLEVELAND PITTSBURGH

OAYTON OCOUJMBUS
INDIANAPOUSO O

NORFOLK

• LARGE
O MEOJUM

SCALE IN MILES

Figure 4. Major Air Hubs

C. TRAVEL CHARACTERISTICS

The regional travel patterns were examined for variations in
travel mode between regions, for variations in travel mode between urban
and rural travelers within a given region, and also for variations in
urban and rural travel patterns from one region to another. These
variations in regional travel patterns are given in Table 1 in percentages
which are average values for all stage lengths. The heavy dependence
of the rural traveler on the automobile is clearly evident. This
dependence can be attributed to a lack of common carrier service in
rural areas.

The air traveler characteristics shown in Figure 5 were

Table 1. Regional Travel Patterns (Percent of Total)

ALL TRAVEL
AUTO
AIR

OTHER

URBAN TO RURAL
AUTO
AIR

OTHER

RURAL TO ANYWHERE
AUTO
AIR

OTHER

REGION

SOUTH

APPALACHIA

93.7

93.0

93.5

3. 1

2.7

2.6

3.2

4.3

3.9

89.9

91.8

92.6

4.8

3.5

3.4

5.3

4.7

4.0

URBAN TO URBAN

PERCENT
OF TOTAL
TRAVEL
BY AIR

RURAL TO ANYWHER
URBAN TO RURAL

STAGE LENGTH (STATUTE MILES]

Figure 5. Air Traveler Characteristics

derived to show how air travel use varies between the well developed
urban service and the poorly developed rural service. The difference
between urban and rural air mode usage is indicative of the potential
for rural air travel if improved air service can be provided. The
distance at which the air modal split approaches zero indicates a
minimum stage length over which viable air service can be provided.

This distance will vary depending upon local conditions.

In addition to the above characteristics, the 1967 Census of
5

Transportation data tape provided an opportunity to examine the
traveler's characteristics peculiar to low-density or rural regions.

There were no apparent person-trip patterns, as a function of household
income level, trip purpose, or trip distance, which were consistent
over the four census regions. Consequently, a unique set of travel
propensity characteristics is required as inputs to the traveler mode
choice program (Section IV. B) for each air transportation arena to be
evaluated.

In the previous discussion of trading areas and air hubs, it was
noted that there were two types of travelers: local and long distance
(connecting). Unlike the local traveler concerned only with travel
within the major trading area, the connecting traveler desires to
connect with long-haul air trunk service which is available at the large
and at most medium air hubs (major air hubs). To determine the mix
of local and connecting air travelers, a regression analysis was made
of the existing rural air traveler data. The analysis showed that the
mix varied from region to region and as a function of trip distance
(Figure 6). However, the analysis also showed that as travel distances
to the air hub decrease connecting passengers form the dominant demand,
and as distances increase local travelers become dominant. Therefore,
to achieve an adequate aircraft passenger load factor in a low-density

region the data suggest that both local and connecting passenger
sources be combined; therefore, the air hub of the potential low-density
air transportation arena should be a major trading center (for local
travel) that is also a major air hub offering good long-haul air trunk
service for the long-distance traveler. The boundaries of this low-
density air arena would usually be the established boundaries of the
major trading area; however, the boundaries may be modified somewhat
to reflect the effect of other nearby major air hubs.

PERCENT

CONNECTING

NONSTOP AIR MILES

Figure 6. Connecting Air Passengers

Figure 7 shows the major air hubs as an overlay on the major
trading center map. There are 44 potential low-density air arenas in
the United States that satisfy these criteria. In addition, there are 22
marginal arenas where the major trading center is not a major air hub
or where a major air hub is not a major trading center. The hub
cities for these arenas are given in Table 2.

Figure 7. Potential Low-Density Air Arenas
Table 2. Low-Density Air Arena/Hub Cities

Major (Major Trading Center and Major Air Hub)

1 .

Atlanta, Ga.

16.

Indianapolis, Ind.

30.

Omaha, Neb.

Birmingham, Ala.

17.

Jacksonville, Fla.

31.

Philadelphia, Pa.

Boston, Mass.

18.

Kansas City, Kas.

32.

Phoenix, Arizona

Buffalo, N. Y.

19-

Knoxville, Tenn.

33.

Pittsburgh, Pa-

Charlotte, N. Car.

20.

Los Angeles, Calif.

34.

Portland, Ore.

Chicago, Illinois

21.

Louisville, Ky.

35.

Richmond, Va.

Cincinnati, Ohio

22.

Memphis, Tenn.

36.

Salt Lake City, Utah

Cleveland, Ohio

23.

Miami, Florida

37.

San Antonio, Texas

Columbus, Ohio

24.

Milwaukee, Wise.

38.

San Francisco, Calif

10.

Dallas, Texas

25.

Minneapolis/

39-

Seattle, Washington

11.

Denver, Colo.

St. Paul, Minn.

40.

Spokane, Wash.

12.

Detroit, Mich.

26.

Nashville, Tenn.

41.

St- Louis, Missouri

13.

Des Moines, Iowa

27.

New Orleand, La.

42.

Tampa, Florida

14.

El Paso, Texas

28.

New York, N. Y.

43.

Tulsa, Oklahoma

15.

Houston, Texas

29.

Oklahoma City, Okla.

44.

Washington, D. C-

Marginal (Majo

r Trading Center or

Major Air Hub)

1 .

Charleston, W. Va.

Norfolk, Va.

17.

Las Vegas, Nev.

Little Rock, Ark.

10 .

Baltimore, Md.

18.

San Diego, Cal.

Mobile, Alabama

11.

Hartford, Conn.

19-

Sacramento, Cal.

Shreveport, La.

12.

Providence, R. I.

20.

Reno, Nevada

Wichita, Kas.

13.

Albany, N. Y.

21.

Dayton, Ohio

Orlando, Fla.

14.

Syracuse, N. Y.

22.

Rochester, N. Y.

Greensboro, N. C.

15.

Albuquerque, N. M.

Raleigh, N. C.

16.

Tucson, Arizona

ARENA SELECTION AND CHARACTERIZATION

Since the established characteristics of the low-density regions
appear nonuniform across the nation, arenas were selected in two of
the four census regions in order to examine typical problems in low-
density air transportation. Since the contract guidelines stated that one
of the low-density arenas studied in the Western Region Program* would
be used, it remained to select an arena from one of the other census
regions for comparison. The rural arena characteristics used in the
selection of a representative rural air arena are shown in Table 3.

Table 3. Arena Characteristics Summary

LARGE AND

MAJOR

TOTAL

AVG. STAGE

MEDIUM

TRADING

PERSONS

LENGTH, Ml.

AIR HU8S

CENTERS

PER SQ.MI.

PERSONS

WEST

284

7.8

8 X I0 6

SOUTH

155

30.8

NO. CENTRAL

231

33.2

NO. EAST

196

1 1

74.8

Based on these arena characteristics, the West and South
appeared to be representative of low-density regions and were selected
for further analysis. In order for the arenas to be truly representative,
those with diverse characteristics were chosen for evaluation and
additional characteristics such as population growth and surface trans-
portation travel time were included.

In the Western region, Arizona was selected because it
satisfied the requirements for a low -density air arena (it contained a
major trading area with a major trading center that was concurrent
with a large or medium air hub). In the Southern region, West
Virginia was selected because it appeared to offer a suitable arena
with characteristics quite different from those of Arizona. The representa-
tive arena characteristics are summarized and compared in Table 4.

Table 4. Comparison of Representative Arenas

MAJOR TRADING
CENTERS

PHOENIX,

ARIZONA

CHARLESTON,
WEST VIRGINIA

NATIONAL

AVERAGE

STAGE LENGTH, mi

LONG, 210

SHORT, 72

190

AUTO SPEED, mph

FAST, 65

SLOW, 40-55

1960-70 POPULATION
GROWTH, % INCREASE

ABOVE AVERAGE,
2.8

BELOW AVERAGE,
-0.2

1.3

POPULATION,
% RURAL

BELOW AVERAGE,
25.5

ABOVE AVERAGE,
61.8

MAJOR TRADING
AREA

ENTIRELY IN STATE

PART OF FOUR STATES

PART OF 2 OR
MORE STATES

AIR TRANSPORTATION
HUB

YES

IV. ARENA MODELING

The characterization and analysis of the two chosen arenas (Arizona,
West Virginia) involved the route selection; obtaining the required traveler,
aircraft and economic data; analysis of the profitability of operating various
existing aircraft as a function of route passenger demand; and comparison
of the results for the studied routes. This work is schematically depicted in
Figure 8.

Figure 8. Analytic Approach

A. ROUTE SELECTION

A rural air service operator has some flexibility in adjusting operating
characteristics such as routing, frequency of service, fleet size, and scheduled

fare, as opposed to the more rigid intrinsic factors such as aircraft
performance and cost.

Two routing concepts, nonstop and "stop-on-demand, " were
considered in this study.

1. NONSTOP ROUTE CHARACTERISTICS

The first route structure concept comprised three types of nonstop
air service segments as shown in Figure 9* Phoenix and Tucson, Arizona;

MAJOR TRADING CENTER
AND MAJOR AIR HUB

RURAL

TOWNS

TYPE A

MAJOR TRADING CENTER
OR MAJOR AIR HUB

TOWNS

TYPE B

COMMUNITY NEITHER
MAJOR TRADING CENTER
NOR MAJOR AIR HUB-

•-*-

nuo-7

-RURAL

TOWNS

TYPEC

Figure 9- Nonstop Route Concept

Las Vegas, Nevada; and Charleston, West Virginia were the major air
hubs and/or major trading centers which were combined with the rural
towns to make up a total of 30 Type A and B nonstop city pairs analyzed
in detail in this study. In addition, four Type C city pairs were analyzed.
The Type A city pairs are considered to have good potential, the Type B
city pairs marginal potential, and the Type C city pairs little potential for
viable nonstop service. The 34 city pairs are shown on the Arizona and
West Virginia arena maps in Figures 10 and 11, respectively.

MAJOR TRADING AREA 8OUN0ARY

NONSTOP ROUTES

COMMUNITY TO MAJOR TRADING CENTER AND MAJOR AIR HUB

COMMUNITY TO MAJOR AIR HUB

STOP-ON-DEMAND ROUTES

COMMUNITY TO MAJOR TRADING CENTER AND MAJOR AIR HUB

Figure 10.

• RURAL COMMUNITY

MAJOR TRADING AREA BOUNDARY
NONSTOP ROUTES

COMMUNITY TO MAJOR TRADING CENTER

COMMUNITY TO COMMUNITY

Arizona Arena

West Virginia Arena

2 .

"STOP-ON-DEMAND" ROUTES

The second route structure concept considered is illustrated in Figure 12
and incorporates a scheduled "stop-on-demand, " or modified "dial-a-plane, "
concept.

RURAL TOWN

ORIGINAL ROUTE

\ /

, RURAL TOWN ,
STOP ON OEMAND

MAJOR AIR HUB
— • MS MAJOR
TRADING CENTER

Figure 12. Scheduled "Stop -on- Demand" Route Concept

The original "dial-a-plane" concept would provide air service to com-
munities that do not have sufficient daily passengers for scheduled air service.
This system lies somewhere between that of an air taxi charter and a scheduled
air operation, with the fare and service in a similar position. With the aid
of computerized routing, the "dial-a-plane" system would accept incoming
telephone requests and seek out the best aircraft itinerary to minimize trip
lengths and passenger waiting.

The scheduled "stop-on-demand" concept is similar to the "dial-a-
plane" concept except that the nominal route schedule includes time for diver-
sion of the aircraft for a "dial a plane" or "stop on demand". As shown in
Figure 12, a nominal (original) route is established between a rural town and
an air hub. A second rural town (stop on demand), off the nominal route, is
provided service to the air hub only when passengers request it. Passenger
traffic between the two rural towns is negligible compared with traffic to the
hub.

One example of this route structure was analyzed to determine the
circumstances under which total service could be made more viable.
Phoenix-Ft. Huachuca was the nominal service path and Willcox, Arizona
was the "stop-on-demand" rural town chosen for this example. Schedule,
fare, frequency of service, and fleet size were treated as parameters in
this study; the results are given in Section V. B.

B. CITY PAIR (ROUTE) AND TRAVELER CHARACTERISTICS

The characterization of each route for the two chosen arenas
involved the development of total local travel demand projections between
city pairs in each arena, and use of the traveler characteristics to develop
percent demand by each travel mode (e. g. , air, car, bus).

The 1970 Census of Population provided the city population data
that were the bases for predicting travel demand between city pairs. The
1975 population was projected in the following manner. Arizona state
economic and planning agencies supplied 1975 county population projections,
and the 1970 city-to-county population ratios were applied. A linear
extrapolation of the I960 and 1970 census city population data to 1975 was
used for West Virginia.

The resulting total travel demand projections for 24 city pairs in
Arizona and the 10 city pairs in West Virginia are given in Tables 5 and 6.
These were determined using a simple gravity model calibrated to base
years with data from the states involved and the CAB. Notice that in West
Virginia the total travel demand (a function of the population product of the
city pairs) in most cases shows a large decrease, reflecting the continuing
decline in population of the state, as opposed to the trend towards
increased travel in Arizona.

Next, the fraction of the total intercity passenger demand that
chooses each intercity travel mode was determined using a traveler simu-
lation type of modal split model. Each of the 34 city pairs was modeled as

Table 5. Arizona Total Daily Travel Demand

CITY PAIR

DAILY TWO-WAY
TRAVELERS

1960

1975

(estimated)

PHOENIX - AJO

322

602

- CLIFTON

103

170

- DOUGLAS

114

186

- FLAGSTAFF

1589

3448

- FT. HUACHUCA

116

435

- GLOBE

1673

3045

- GRAND CANYON

354

697

- HOLBROOK

135

293

- KINGMAN

159

448

- LAKE HAVASU CITY

(a)

392

- NOGALES

234

709

- PAGE

177

- PARKER

101

207

- PRESCOTT

2309

3995

- SAFFORD

344

681

- SAN MANUEL

193

338

- SHOW LOW

315

652

- 5PRINGERVILLE

217

- WILLCOX

112

193

- WINSLOW

168

265

TUCSON - DOUGLAS

477

630

- FT. HUACHUCA

1218

3471

LAS VEGAS - KINGMAN

( b )

216

- PRESCOTT

(b)

a Did not exist in 1960
b Adequate travel data unavailable.

Table 6. West Virginia Total Daily Travel Demand

CITY PAIR

DAILY TWO-WAY
TRAVELERS

1965

1975

(estimated)

CHARLESTON - BECKLEY

310

266

- BLUEFIELD

- CLARKSBURG

- HUNTINGTON

984

754

- MORGANTOWN

148

- PARKERSBURG

231

188

HUNTINGTON - BECKLEY

- PARKERSBURG

PARKERSBURG - CLARKSBURG

111

101

- MORGANTOWN

depicted in the abstraction of the arena and travel modes of Figure 13.

HUB CITY

• LOCAL TRAVEL
FUNCTIONS

• RENTAL COSTS

ZONES

•LOCATION ANO SIZE
•RELATIVE DEMAND
• TIME VALUE DISTRIBUTION

-TRAVELER ATTRIBUTES

• BUSINESS/NONBUSINESS

• PARTY SIZE

• TRIP DURATION

• EXACT ORIGIN AND DESTINATION

• TIME VALUE

• PREFERENCE FACTORS

MODE AND SERVICE PATH

• MODE PREFERENCE DISTRIBUTIONS

• TRIP COST

• TRIP TIME

• WAITING TIME DISTRIBUTIONS

PORT

• PROCESSING TIME
•LOCATION

RURAL CITY-

LOCAL TRAVEL
SEGMENT

Figure 13. Modal Split Model

The traveler mode choice was determined by generating a
statistically adequate number of computer -simulated travelers and
modeling the decision process of each traveler. For each route about
5000 travelers were simulated with each traveler having a unique set of
characteristics randomly selected from appropriate probability distributions.

The modal choice model was calibrated for selected routes in each
arena so that the model accurately predicts the actual mode use
percentages for a given base year. Then, by using predicted changes in
travel characteristics (e. g. , fare, time, frequency of service) the modal
choice for the 1975 time period is determined.

Inputs to the model consist mainly of distributions and other
descriptive statistics needed to accurately represent travelers, travel arenas,
and travel modes. Figure 14 gives one type of input data^ showing travel
propensity as a function of trip purpose, income, trip distance, and region.

PERSON- TRIPS PER
HOUSEHOLD PER YEAR
ORIGIN RURAL
DESTINATION ! ANY

NON -BUSINESS

BUSINESS

Figure 14. Example of Traveler Characteristics

Since the recommended operational characteristics of the air mode
were not known at this stage in the analysis, a series of computer runs were
used to generate curves which give the projected air demand as a function of
different fares, travel times, and service frequencies. This analysis was
performed for each selected city pair in the Arizona and West Virginia arenas.
The sensitivity curves were used later in conjunction with an economic analysis
to determine optimum aircraft concepts, fleet sizes, and operating character-
istics for the 1975 time period.

The modal choice model simulates only local travelers whose origin
and final destination are both within the modeled arena. However, as pre-
viously mentioned there is another significant group of air travelers, called
connecting travelers, whose trips to or from a hub city are only a small leg

on a longer trip. These travelers do not typically behave like the local
traveler since they have different attributes and requirements. To accom-
plish the modeling of the connecting traveler, then, the modal split simulation
results used to obtain local traveler sensitivities were appropriately modified
to reflect the different sensitivities of the connecting traveler. These were
combined with actual data on the mix of local and connecting travelers for
various city pairs as a function of distance (Figure 6) in order to construct
a model of the total air travelers.

C. AIRCRAFT CHARACTERISTICS

In order to select the preferred aircraft for operations in the low-
density regions of the United States, the following items were considered:

Capacity

Applicable air carrier regulations
Commuter aircraft
Operating performance
Cost

The initial aircraft capacity determination was based on the existing air
passenger demand for rural areas with good air service utilizing the 1969
Civil Aeronautics Board (CAB) Origin-Destination Survey. ^ An analysis was
made of the travel propensity (Figure 15) by region, frequency of departure,
and population. This indicated that travel propensity varies between regions,
within a region, and with frequency of departure. The maximum air passenger
demand (departing passengers per day per 1000 population) was then used to
initially size the aircraft capacities required to serve communities in a given
rural market (Figure 16).

Five aircraft were selected from those aircraft available for commuter
air carrier operation. These aircraft include both piston and turboprop and
pressurized and unpressurized configurations, vary in passenger capacity
from 5 to 19 seats, and possess a range of cruise speeds and takeoff and
landing capabilities compatible with rural market runways. The five aircraft
selected were the Piper Aztec Turbo E, the Cessna 402B, the Beechcraft 99A,

DEPARTING
PASSENGERS/
DAY /1 000
POPULATION

COMMUNITY

POPULATION

( 000 )

Figure 16. Estimated Aircraft Capacity

the Twin Otter DHC-6, and the Swearingen Metro. Block time perform-
ances for these aircraft are given in Figure 17.

PIPER AZTEC

TRIP DISTANCE-MI

Figure 17. Aircraft Block Time

Existing scheduled air carrier regulations increase in scope and com-
plexity as the size of the aircraft increases (Table 7). Economic regulations
are established by the CAB under Part 298, ^while the FAA establishes air-
craft certification (Parts 23 or 25)^ and aircraft operations (Parts 135 or

121). a Commuter air carriers are also not eligible to participate in the air-
craft loan guarantee program (Public Laws 85-307, etc. ) ^ because of their
lack of CAB certification.

The net result of these regulations is to increase direct and indirect
operating costs as seating capacity increases because of greater initial air-
craft cost, more stringent crew requirements, and more complex reporting
and operating procedures. At the same time, the commuter operator is not
able to obtain favorable financing for aircraft purchases.

Table 7. Impact of Air Carrier Regulations on Cost

c n
co

C_>

ISO 0

D. ECONOMIC MODEL

Economic modeling required an analysis of avionics and aircraft
flyaway cost, direct operating cost (DOC), and indirect operating cost (IOC),
and the development of a return on investment (ROI) model. Several sources
were used to develop the cost models.

1. FLYAWAY COST

Flyaway costs were based on the avionics and aircraft manufacturers'
quotations for equipment requirements consistent with the government
regulations of Table 7.

Table 8 shows how the avionics equipment cost tends to increase with
increasing aircraft weight. Table 9 shows the flyaway cost for each of the
five aircraft studied. These costs include a complete complement of avionics
plus such optional equipment as deicers and cabin air conditioning.

2. DIRECT OPERATING COST

The DOC for the five aircraft are based on manufacturers' recommenda-
tions modified to reflect actual costs incurred in commuter air carrier
operations. Costs were modeled for six commuter air carriers who
served the regions of the country shown by the shaded areas in Figure 18-

The DOC per trip was developed as a function of trip distance based on
actual utilization of the aircraft with the carriers. Figure 19 shows this cost
for the Cessna 402B for stage lengths from 50 to 200 miles along with an
apportionment of the DOC to the various cost elements.

Table 10 compares the DOC for each of the five aircraft for annual
utilizations of 2000 and 3000 hours (which represent the approximate range
of utilizations achieved by the six carriers).

Table 8. Avionics Equipment Cost

AIRCRAFT WEIGHT

UP TO
6500 lb

6500 TO
12,000 lb

OVER
12,500 lb

NON-TSO*

TSO*

DUAL VHF COMMUNICATIONS, 720 CHANNEL
CAPACITY AND NAVIGATION (VOR/ILS)

200 CHANNEL CAPACITY

$ 3,400

5, 800

$ 14,000

$ 25,200

ATC TRANSPONDER - 4096 CODES

600

1,200

2, 200

4,800

AUTOMATIC DIRECTION FINDER

800

1,300

3,300

4,800

DISTANCE MEASURING EQUIPMENT

1,500

2, 500

3, 500

20, 000

AUTOPILOT

700

4, 500

5, 600

12, 000

EMERGENCY LOCATOR TRANSMITTER

150

300

500

...

COLLISION AVOIDANCE/PWI

400

25, 000

INTERCOMMUNICATION AND PUBLIC ADDRESS

400

600

1,000

TOTAL EQUIPMENT

$ 7,950

16, 400

$ 30, 100

$ 92,800

‘Technical service order (approved environmental testing)

Table 9. Flyway Cost Summary (in Thousands of Dollars)

UNPRESSURIZED

PRESSURIZED

PISTON

TURBOPROP

PIPER
AZTEC
TURBO E

CESSNA

402B

BEECH

99A

DeHAVILLAND
DHC -6-300

SWEARINGEN

METRO

BASIC COST

$ 80

$ 117

$ 400

$ 495

$ 540

OPTIONAL EQUIPMENT

AVIONICS

TOTAL FLYAWAY COST

$ 113

$ 150

$ 455

$ 550

$ 595

STAGE LENGTH- STATUTE MILES

Figure 19. Direct Operating Cost - Cessna 402B

Table 10. Direct Operating Cost Summary

DOC (PER FLYING HOUR)

UNPRESSURIZED

PRESSURIZED

PISTON

TURBOPROP

ANNUAL UTILIZATION

PIPER
AZTEC
TURBO E

CESSNA

402B

BEECH

99A

DeHAVILLAND
DHC -6-300

SWEARINGEN

METRO

2000 hr

$ 42

$ 49

$ 113

$ 104

$ 136

3000 hr

104

125

INDIRECT OPERATING COST

IOC data obtained from the actual experience of the six commuter air
carriers were used to develop a rural air carrier IOC model with these
parameters: cost per departure, number of passengers, available seat miles
(ASM), and revenue passenger miles (RPM). The model was then used to
determine IOC as a function of stage length as illustrated in Figure 20. Also
shown in the figure is the IOC breakdown for the six carriers; it may be seen
that costs are about equal for aircraft and traffic servicing, reservations and
sales, and general and administrative expenses.

Figure 20. Indirect Operating Cost

4. RETURN ON INVESTMENT

The ROI reflects an average yearly investment base. The ROI model
used is based on criteria acceptable to the California Public Utilities Com-
mission and an eight year equipment depreciation period with a 20% residual.
In Table 11, the required profit per aircraft per year to earn a 1 0. 5% rate of
return is shown for each aircraft used in the study.

Table 11. Aircraft Operating Profit Requirements

YEARLY

REQUIRED

AIRCRAFT

OPERATING

PROFIT

YEARLY
REQUIRED
PROFIT PER
PASSENGER
SEAT

PIPER AZTEC, TURBO E

$ 15,594

$ 3,119

CESSNA 402B

20, 700

2,300

BEECH 99A

62, 790

4, 198

DeHAVILLAND DHC -6-300

75, 900

3, 994

SWEARINGEN METRO

82, no

4,322

5. BREAKEVEN FARE REQUIREMENT

The flyaway costs, DOC, and IOC developed from the actual experience
of the six commuter airlines were used to establish a breakeven fare that is
a function of both stage length and load factor. Figure 21 is a plot of the

BREAKEVEN

FARE-

OOLLARS

Figure 21. Breakeven Fare Requirement

breakeven fare for the five-passenger Piper Aztec, the nine-passenger
Cessna 402B, and the fifteen-passenger Beechcraft 99A.

If it is assumed that the same load factor is achievable with all three
aircraft, the smallest aircraft has to charge the largest fare while the largest
aircraft can charge the lowest fare (since it is the most efficient machine).

The problem lies in matching the passenger demand on a given route and the
breakeven fare with the optimum aircraft capacity.

6. COMPARISON OF OPERATING COSTS, REVENUES,

AND PROFITS

In the breakeven fare analysis it was noted that the larger aircraft is
generally more efficient to operate. Table 12 compares the average operating
costs of the composite rural commuter with the costs of Allegheny Airlines and
Pacific Southwest Airlines (PSA). Allegheny is a local carrier with few high-
density routes and operates the smallest available commercial jet air trans-
ports; PSA operates on high-density commuter routes with medium size jet
aircraft. Here again one can note the increased efficiency gained by the
airlines using the larger aircraft on the more highly traveled routes.

Table 13 compares the revenue and profit for the three carriers. It
shows that the smaller carrier already has a larger percentage of his operating
revenue from nonpassenger sources, and that even with these additional
sources of income the fares ((i/RPM) that the rural commuter must charge
are roughly one and one-half those of a local carrier and triple those of a
high-density commuter carrier like PSA.

E. DEMAND MATCHING METHODOLOGY

The search for a balance between passenger revenue and airline
operating costs is called demand matching. This balance should be at a fare
level that provides a fair ROI to the owners. Each demand matching computer
run is made for one aircraft flying nonstop over one route (city pair). Fare,
frequency of service, and trip time are all variables.

Table 12. Comparison of Operating Costs

ALLEGHENY

PSA

RURAL

COMMUTER

OPERATING COST (tf/ASM)
DIRECT OPERATING COST

FLYING OPERATIONS

1. 199

0.627

2. 038

DIRECT MAINTENANCE

0.613

0.312

0.851

DEPRECIATION

0. 189

0. 335

0. 792

TOTAL DIRECT OPERATING COSTS

2.001

1.274

3.681

INDIRECT OPERATING COST

PASSENGER SERVICE

0. 262

0. 165

0.210

AIRCRAFT AND TRAFFIC SERVIVING

0. 849

0. 238

0.743

RESERVATIONS AND SALES

0.355

0. 188

0. 708

GENERAL AND ADMINISTRATIVE

0. 182

0.151

0.615

DEPRECIATION - GROUND PROPERTY

0. 033

0.029

TOTAL INDIRECT OPERATING COSTS

1.681

0.780

2.305

TOTAL OPERATING COST (tf/ASM)

3.682

2.054

5.986

TOTAL OPERATING COST (tf/RPM)

7.816

3.998

11.713

Table 13. Comparison of Operating Revenue/Profit

ALLEGHENY

PSA

RURAL

COMMUTER

OPERATING REVENUE (% of total)

PASSENGER

91.7

97.7

84.5

FREIGHT, EXPRESS, MAIL

6.0

1.3

7. 1

CHARTER

0.2

3.8

MISCELLANEOUS

1 . 1

1.0

4.6

SUBSIDY

1.0

100.0

FARE (cf/RPM)

8.427

4.601

12.408

OPERATING PROFIT (<f/RPM)

0.611

0.603

0.695

The traveler sensitivity to fare, frequency of service, and trip time
as a function of his income and trip purpose is first determined by the
traveler mode choice as previously discussed in Section IV. B. In Figure 8,
the input and output parameters of the demand matching process were illus-
trated. Traveler characteristics, aircraft characteristics,
and airline economics are inputs to the demand matching. The program
searches through a range of fares and frequencies of service (number of daily
round trips) and computes the daily air passengers and profit or loss for each
case. If an average load factor of 7 5% is reached the frequency of service is
increased to reduce the load factor, or if a utilization of 3000 hours is reached
the fleet size is increased by one aircraft.

In the low-density arenas analyzed in this study the demand matching
results displayed varying behavior. These are shown schematically in
Figure 22 and the results are discussed in the following paragraphs.

• PROFITABLE CASES

(T) LOW FARE, HIGH DEMAND
(D HIGH FARE, LOW DEMAND

• UNPROFITABLE CASE IMPROVEMENT

® LOWER FARE TO INCREASE DEMAND AND REDUCE LOSSES
© RAISE FARE TO INCREASE REVENUE AND REDUCE LOSSES

• INTEGER EFFECT

Figure 22. Demand Matching Optimization

The discussion can be broken into three categories: the profitable
cases, unprofitable cases, and the integer effect. Points (T) and (?) demon-
strate profitable operations. At (?) a very low fare creates a high passenger
demand allowing profitable operations but at a high load factor. At (?) a
high fare creates a low passenger demand but the high fare allows profit-
able operations even at a relatively low load factor.

The unprofitable cases (Points (?) and (5) ) occur where the revenue
(fare times the number of passengers) is below operating costs. At
(?) the fare can be lowered to significantly increase the passenger demand (and
the load factor) and reduce the losses, and at (?) the fare can be increased
with a relatively small decrease in passengers with the net effect of increasing
revenue and reducing the losses. At both (7) and (?) the operations are
equally profitable to the airlines, but at (T) the public receives the greatest
benefits because of the large number of passengers served.

At (?) one sees the integer effect where the aircraft has reached the
maximum load factor and more passenger seats have to be made available.

This can be done either by increasing the frequency of service (adding another
trip) or, if the aircraft is already in full use, by adding another aircraft to
the fleet. The effect is that more expenses are incurred as shown on the
profit and loss curve. On the rural low-density air routes, unlike urban
high-density routes, either the addition of only one round trip per day to the
air service schedule or the addition of only one aircraft to the fleet size can
substantially affect the viability of the operation.

V. AIR SERVICE POTENTIAL

A. NONSTOP DEMAND MATCHING RESULTS

1. REPRESENTATIVE NONSTOP ROUTE

Demand matching results for each of the five candidate

aircraft are shown in Figure 23 for one of the 34 nonstop city pairs

analyzed. This city pair, Phoenix-Ft. Huachuca (160 air miles), is

1 4

a representative example of the complete results.

The trend line shown for each aircraft indicates the annual
profit or loss above or below a 10. 5% ROI as a function of aircraft
type, air fare, and number of daily passengers carried. (The jumps
in the curves are caused by changes in fleet size or frequencyof
service. ) It is evident that this air demand cannot be economically
served by the 15 and 19 passenger aircraft but the 5 and 9 seat aircraft

appear profitable. This is a good example of the importance of
matching the smaller aircraft capacities to the lower demand routes.

TOTAL DAILY
AIR PASSENGERS

Figure 23. Nonstop Results: Phoenix-
Ft. Huachuca (160 Miles)

2 .

ARIZONA ARENA SUMMARY

A summary of the Arizona arena evaluation indicating daily
air passengers, number of aircraft, fleet size, ROI, and aircraft
investment costs for the Cessna 402B is shown in Table 14. In
making the evaluation of the various routes, the highest consideration
was given to maximizing the number of passengers served at the
lowest possible fare and ensuring that operating profits were
maximized (or losses minimized). The tabulation for the 24 routes
and the arena summary are based on these criteria. The Cessna
402B can be operated profitably on 21 of the 24 routes and, after
combining the losses with the profits, can serve all 24 routes with a
fair return on the $3. 9 million investment required.

Each of the other four aircraft was evaluated in the same
manner and their comparison (Table 15) indicates that the Cessna 402B
and Piper Aztec aircraft could serve all Arizona city pairs at better
than a 10. 5% ROI. The Beechcraft 99A shows a reduced ROI
while the Twin Otter and Swearingen Metro could not be utilized
economically for service on most of the routes. The Cessna 402B and
Piper Aztec aircraft investment costs are also well below those for the
other aircraft although their fleet size is considerably higher.

On some routes such as Phoenix-Globe or Phoenix-Flagstaff the
use of the five-passenger Piper Aztec was unfeasible because of the
large demand. The Beech 99A or Swearingen Metro could better serve
this market although at a higher fare level.

The Twin Otter, because of the low cruise speed, only
performed well between Phoenix and Grand Canyon, Prescott, or
Show-Low. The Beech 99A and Swearingen Metro generally performed
well on routes radiating from Phoenix, but poorly from Tucson or Las
Vegas because of low demand.

The Cessna 402B performed well out of all air hubs except Las
Vegas because of low demand on the two routes between Las Vegas -

Table 14.

Cessna

402B Evaluation

Summary

--Arizona Arena

CITY PAIR

FLEET

SIZE

ONE-WAY
FARE, $

TOTAL

DAILY

ROUND

TRIPS

TOTAL
DAILY AIR
PASSENGERS

UTILIZATION RETURN ON

FACTOR INVESTMENT, %

PHOENIX-AJO

9.00

.55

13.5

CLIFTON

15.30

.74

18.1

DOUGLAS

15.50

.61

1.9

FLAGSTAFF

11.30

270

.92

21.2

FT. HUACHUCA

14.00

.98

12.0

GLOBE

8.70

324

.67

21.9

GRAND CANYON

14.50

122

.79

14.6

HOLBROOK

16.00

.89

38.4

KINGMAN

15.00

.77

13.5

LK. HAVASU CITY

16.80

.90

52.1

NOGALES

16.30

.95

41.9

PACE

17.50

.74

- 2.2

PARKER

11.50

.42

1.9

PRESCOTT

11.00

.81

57.7

SAFFORD

20. 50

.89

89. 1

SAN MANUEL

9.50

.75

14.6

SHOW-LOW

17.40

134

.98

84.3

SPRINGERVILLE

17.50

1.00

44.5

WILLCOX

13.30

.46

1.9

WINSLOW

13.50

.61

16. 6

TUCSON-FT. HUACHUCA

7.30

. 16

16. 1

DOUGLAS

8.30

.28

4.4

LAS VEGAS-KINGMAN

5.00

.28

-18.4

PRESCOTT

8.00

.56

-35.2

ARENA SUMMARY

DAILY AIR PASSENGERS 1,703

FLEET SIZE 26

AIRCRAFT INVESTMENT (000) $3,900

RETURN ON INVESTMENT 25.9%

Table 15. Aircraft Evaluation Summary- -Arizona Arena

AIRCRAFT

DAILY AIR
PASSENGERS

FLEET

SIZE

aircraft

INVESTMENT

(000)

RETURN ON
INVESTMENT, %

PIPER AZTEC TURBO E

787*

$ 2599

28.5

CESSNA 402B

1703

3900

25.9

BEECHCRAFT 99A

1509

5915

3.4

TWIN OTTER

1737

8800

-16.2

SWEARINGEN METRO

1981

6545

- 2.4

•Does not include service between Phoenix-Flagstoft and Phoenix-Globe,
aircraft too small for route

Kingman and Las Ve gas-Prescott. However, for service between
Phoenix-Flagstaff, Phoenix-Globe and Phoenix-Grand Canyon the
fleet size and number of daily round trips had to be significantly
increased to meet the high demand.

3. WEST VIRGINIA ARENA SUMMARY

An analysis of the operational and economic characteristics
of the two smaller aircraft (Cessna 402B and Piper Aztec) shows that

none of the ten city pairs generates enough demand to support
scheduled air service with a minimum frequency of two round trips per
day. Increased frequency of service does not create sufficient
additional demand so it results in even greater unprofitability.

A West Virginia arena aircraft evaluation summary similar to
that of Arizona is shown in Table 16 for the Cessna 402B; Table 17
shows a comparison of the two aircraft studied- The three larger
aircraft were not included as their economic feasibility was well
below that of the two smaller aircraft. This analysis demonstrates
that nonstop service, even with minimum fares, is nonviable with any
of the aircraft analyzed.

The results in West Virginia are not surprising considering
the small total travel demand forecast for 1975. The total travel
demand by all travel modes estimated for the West Virginia routes in
1975 was much lower than the base year of 1965 (Table 6). This is due
to the use of the declining population trend from I960 to 1970 to fore-
cast the demand in 1975. Also, two other factors reduce the air
travel between the base year of 1965 and the forecast year of 1975. The
first will be the completion of the Appalachian and Interstate highway
systems in West Virginia. These good roads will reduce car trip time
and costs, making the auto more attractive. Second, the number of
air trunk carriers serving Charleston has been continuously declining
and by 1975 Charleston will be a poor air hub for connecting air
travelers. The 1975 rural air commuter predictions for West Virginia
reflect all three of these negative factors.

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4. VIABLE ROUTES, AIRCRAFT, AND OPERATING CONCEPTS

Table 18 tabulates the nonstop routes for the 34 city pairs
analyzed. The first 20 city pairs are Type A nonstop routes;

Phoenix, Arizona is the hub city which is both a major trading
center and a major air hub. The 20 rural communities vary in
population from below 2000 to about 25, 000 persons and the travel
distance between city pairs ranges from 60 to 250 miles. All but two
of the city pairs can be provided with viable air service with a
minimum of two nonstop round trip flights per day. In general, Type A
city pairs represent the highest possible travel demand (all modes) and
the greatest possible trip distance involved in local rural travel.

The next ten city pairs are Type B nonstop routes; the hub
cities are either a major trading center or a major air hub. Three
hub cities were included: Tucson, Arizona (major air hub); Las
Vegas, Nevada (major air hub); and Charleston, West Virginia (major
trading center). All ten city pairs proved nonviable for nonstop air
service for each of the five aircraft analyzed. However, the two
smaller aircraft did not lose money on three of the Type B city
pairs. In general, these Type B city pairs represent lower rural
travel demands and shorter trip distances than the Type A city pairs.

The last four city pairs are Type C nonstop routes where
the hub city is neither a major air hub nor a major trading center.

The total travel demand is lower and trip distances shorter than
with the Type B city pairs. The four Type C city pairs all proved
uneconomical for air service.

'■ Figure 24 is a plot of total two-way daily travel demand (all
modes) against air trip distance in miles for each of the 34 city pairs.
This plot shows a reasonable correlation of viability of air service as
a function of both trip distance and total travel demand between
communities. At 150 miles stage length, it can be seen that
a minimum total travel demand of approximately 200 daily person

Table 18. City Pair Nonstop Route Viability

CITY PAIR, ARENA

PHOENIX-AJO
CLIFTON
DOUGLAS
FLAGSTAFF
FT. HUACHUCA
GLOBE

GRANO CANYON

HOLBROOK

KINGMAN

LK. HAVASU CITY

NOGALES

PAGE

PARKER

PRESCOTT

SAFFORD

SAN MANUEL

SHOWLOW

SPRINGERVILLE

WILLCOX

WINSLOW

TUCSON-FT. HUACHUCA
DOUGLAS

LAS VEGAS-KINGMAN
PRESCOTT

CHARLESTON -BLUEFIELD, W. VA.
BECKLEY
CLARKSBURG
HUNTINGTON
MORGANTOWN
PARKERSBURG

PARKERSBURG -CLARKSBURG
HUNTINGTON
MORGANTOWN
BECKLEY-HUNTINGTON

TYPE OF
NON-STOP

ACCEPTABLE AIRCRAFT

CESSNA BEECH
402B 99 A SWEARINGEN

TWIN OTTER
DHC-6

YES

• YES

YES

TOTAL 2 -WAT
DAILY DEMAND 500
(ALL MOOES)

/ <v /J?/

□a

TYPE A

□B

TYPE B

TYPE C

STA6E LENGTH. STATUTE MILES

Figure 24. Viable Routes

trips is required for viable air service, having at least two daily
round trips. The nonstop air service will be economically marginal
at demands and distances just under these levels, and with still
lower demand levels and shorter distances air service proves
nonviable. In these marginal cases the local factors affecting choice
of travel mode will determine the viability of nonstop air service.
Routes other than nonstop should also be considered for these marginal
city pairs.

In summary, from inspection of Table 18 it is seen that the
two smallest capacity aircraft (five to nine seats) are predominant in
the viable routes examined in detail. Further substantiating this
trend is the fact that the two largest capacity aircraft (19 seats) share
in the smallest percentage of viable routes. This summary assumes
that a fair ROI of 10. 5% is achieved. At smaller ROIs, the larger
aircraft can participate in a greater number of viable air routes, but
so can the smaller capacity aircraft.

The obvious conclusion from the results of this viability
analysis is that one of the most important factors in achieving
profitable low-density air transportation is the matching of the
aircraft to the routes and the possibility of using mixed- size aircraft
fleets to accomplish this.

B. "STOP-ON -DEMAND" DEMAND MATCHING RESULTS

In addition to the nonstop route analysis, demand matching
results are shown for a scheduled "stop-on-demand" route concept, a
type of "dial -a -plane" route concept discussed in Section IV. A. 2. For
the example shown in Figure 25, Phoenix -Ft. Huachuca was the
nominal service path and Willcox (149 air miles to Phoenix) was
chosen as the demand stop because by itself it cannot support nonstop
air service to Phoenix with a fair ROI (Table 18). For this comparison
a fleet size of one and a frequency of service of two round trips per day
was assumed.

PHOENIX

PHOENIX- Ft. HUACHUCA
NONSTOP MAKES MONEY

160 mi

ORIGINAL
SERVICE PATH

149 mi
\

PHOENIX -WILLCOX
NONSTOP LOSES MONEY

WILLCOX “STOP
ON DEMAND

52 mi

Ft. HUACHUCA

Figure 25- "Stop-on-Demand" Example

The approach considered under what conditions, if any, an
aircraft normally carrying nonstop passengers between Phoenix and
Ft- Huachuca could be diverted to Willcox to accommodate Phoenix -
Willcox passenger demand and operate at the same profit as the
Phoenix-Ft- Huachuca nonstop route. This involves questions such as:

1. The number of passengers and the fare required at
Willcox to maintain the same profit as the Phoenix-
Ft. Huachuca route.

2. The number of Willcox passengers willing to pay the
required fare.

3. The number of Ft. Huachuca passengers that would be
lost to other modes of travel because of increased trip
time due to the extra Willcox stop, and the effect of
that loss of revenue.

4. The possibility of reducing the fare to Ft. Huachuca

passengers to compensate for the increased time
penalty and its effect on the overall cost picture.

The results from the demand matching analysis indicate that
the Phoenix -Ft. Huachuca -Willcox combination can support viable air
service and provide the same or greater ROI as the Phoenix-Ft.
Huachuca pair by itself. However, only one of the five aircraft
examined had the proper aircraft characteristics for this route (Table
19).

Table 19- Phoenix -(Willcox) -Fort Huachuca
"Stop-on-Demand" Results

Aircraft Passengers

Aircraft makes money willing to pay fare

Piper Aztec

(Capacity too
small to satisfy
demand)

—

Cessna 402B

Yes

Beechcraft 99

Twin Otter

Swearingen Metro

For the profitable Cessna 402B aircraft there are several
suitable fare combinations for the two routes; however, there are some
interesting peculiarities. For example, the Ft. Huachuca passengers
will be paying fares ranging around $25 to $30 on the "scheduled stop-on-
demand" route to Phoenix, while for the nonstop route concept the fare
would have been just under $20. What is interesting is that this "stop-
on-demand" concept will not be workable if the nonstop fare ($20) is
charged to the Ft. Huachuca passengers, much less an even lower one.
This is because the lower nonstop fare would attract so many Ft.
Huachuca passengers that the remaining space on the aircraft would be
at too high a premium for the Willcox passengers.

It seems, therefore, that the "stop-on-demand" passenger
concept will work, but at the expense of the normal nonstop route
passengers. New questions are raised, then, that remain to be studied.
These deal with the alternatives of trading off passenger flow between
cities so that economically viable air service is maintained while the
best interests of the passengers and the arenas are preserved.

For the one " stop-on-demand" route examined the results can
be summarized as follows:

o Stop-on-demand passengers are in effect subsidized at

the expense of nominal service path passengers.

o The stop-on-demand concept allows introduction of

viable air service to additional communities not able to
sustain nonstop service.

o The selection of proper aircraft characteristics is

critical to stop-on-demand viability.

C. SYSTEM FACTORS IMPACTING ECONOMIC VIABILITY

Sensitivity studies of the four following parameters were
performed for each of the 34 nonstop routes to assess the changes in
system economics resulting from variations in aircraft performance
and operating costs:

1. Average cruise speed was increased by 50 mph.

2. Annual utilization was decreased by 500 hours.

3. The DOC was decreased by 10%.

4. The IOC was decreased by 10%.

No rigorous methodology was used to equate these incremental
sensitivity changes. For the five aircraft and six airline operations
modeled it is believed that a change in the aircraft resulting in an
increase in cruise speed of 50 mph is as readily achievable as a 10%
decrease in either the DOC or IOC, or as a 500-hour increment in
utilization. In addition, most second-order effects were not
considered. That is, when the speed was changed (1) the utilization
remained fixed, (2) the flyaway cost was unchanged, and (3) the DOC

remained fixed. The demand matching program did recognize that the
increased speed reduced the travel time which increased the number of
passengers (the additional passengers also increased the IOC, reflecting
the increased cost to handle them). Overall, these sensitivity results should
not be considered in an absolute sense but rather as a comparison of the
benefits that can be gained by varying various portions of a rural air
commuter system.

Figure 26 shows the results of a sensitivity analysis for the
Phoenix -Willcox route using the Cessna 402B. This was a route where
none of the five aircraft was viable for nonstop service.

CC)

• rH

r-H

• fH

r-H

cr)

■t->

O H-.

°o

Ck^

7J o

O <,

>■<

ONE WAY FARE, $

Figure 26. Phoenix-Willcox Cessna 402B Sensitivity Study

Examination of each of the sensitivity results allows the studies
to be ranked in the order of their cost reduction value as follows:

1. Increasing the average cruise speed by 50 mph provided
the largest favorable impact. This had the effect of
reducing the DOC by 23% and the total operating costs
by 13%, since block speed is a major parameter in all
DOC elements. The higher speed resulted in increased
passenger revenue and a small increase in IOC.

This 50-mph increase in cruising speed reversed
a loss of $26, 000 per year to an excess profit (above
10. 5% ROI) of $2, 200 per year.

2. Decreasing the DOC by 10% was not nearly as effective
as increasing the average cruise speed by 50 mph
since it only reduced the overall operating costs by
approximately 6. 5%. The operating loss was reduced to
$19, 750 per year.

3. Decreasing the IOC by 10% only reduced overall
operating costs by approximately 4% and reduced the
operating loss to only $22, 500 per year-

4. Decreasing the annual utilization by 500 hours increased
the hourly cost of hull insurance and depreciation by
20%. However, this cost is only 13% of the DOC so the
overall operating costs only increased by approximately
2. 6% and the operating loss increased to $28,450 per
year.

Some of the potential areas where technical improvements
would have attractive economic payoffs are identified in Table 2 0.

Cost elements for the nominal case are ranked in descending order of
impact on system costs and are discussed in the following paragraphs.

Table 2 0. Trip Cost Allocation by Percent

Percent Of
Total Cost/Trip

Flight Crew - DOC 20. 8

Direct Maint. - DOC 20. 5

Fuel k Oil - DOC 12. 9

Reserv. Sales - IOC 11. 3

Gen. k Admin. - IOC 10. 3

A/C k Traffic Serv. - IOC 10. 2

Depreciation - DOC 6. 8

Pass. Serv. k Liab. Ins. - IOC 5. 2

Hull Ins. - DOC 1. 4

Deprec- Grnd. Equip. - IOC ■ 6

Total Cost/Trip 100. 0

DOC /Trip 62. 3

IOC /Trip 37. 7

The flight crew is the highest single cost item for this nine
passenger aircraft using only one pilot. For larger aircraft, where
two pilots are required (10 to 19 passenger), the flight crew costs are
an even larger percentage of the total cost. Therefore, an effort
should be made to simplify the aircraft cockpit and controls so that the
larger aircraft can be certified for single pilot operation.

Direct maintenance is the second highest cost item. A
comparison of depreciation costs with maintenance costs shows that
it would probably be worthwhile to develop an aircraft that was more
reliable, even if the aircraft and engines cost twice as much initially,
if the result yielded a 50% reduction in the direct maintenance cost.

Fuel and oil costs appear unrealistically high when compared tc
those of larger airlines. It was found that the higher fuel cost was not
due to aircraft or engine inefficiencies causing greater fuel consump-
tion, but to a cost per gallon for the commuter carrier that is twice
that of local and trunk carriers. It is believed that at least a 40%
reduction in fuel costs could result from bulk buying by groups of
commuter carriers.

Reservation and sales expenses could be reduced for rural
carriers by providing ticketing and sales only at the hub city airport.
The passenger would board the aircraft at the rural community and pa}
at the ticket gate (counter) upon departure from the aircraft at the
hub city terminal. Reservations could be made by long distance phone
to a hub city.

General and administrative expenses could be reduced by
broadening the operations base through utilization of the commuter
aircraft for charter operations, mail, and air cargo.

The aircraft traffic service expense could be reduced for a
rural carrier by eliminating virtually all ground personnel at airports
but the hub city terminal. With only two or three daily five-minute
stops at each of the rural communities, utilization of full-time

employees becomes very inefficient. Fewer personnel would be
needed by designing the aircraft to have space for all passenger
baggage, which would be carried on by the passengers, and integral
loading ramps.

Passenger service and liability insurance is the last
appreciable cost item running slightly over 5% of the total cost.
Passenger service currently is a minimum on rural
carriers; however, the liability insurance for commuter carriers is
based on the available seat miles rather than on revenue passenger
miles as is the case for the local and trunk carriers. This cost can be
reduced by one of two ways: either by sizing the capacity of the air-

craft to the route, thus allowing operation at a higher load factor, or
by the commuter carriers buying insurance as a group and thus
achieving lower rates.

As the aircraft block speed increases the IOC items become a
larger percentage of the total operating costs, so the need for
aircraft changes such as carry-on baggage racks and built-in loading
ramps becomes more significant.

REFERENCES

1 . Western Region Short Haul Air Transportation Program, Vols I
and II , Report No. ATR- 71 - (71 90)- 1 . The Aerospace Corporation.

El Segundo, Calitornia. (July 1970)

2. Joint DOT-NASA Civil Aviation Research and Development Policy Study ,
Report No. DOT-TST-10-4 NASA SP-265, Department of Transportation
and National Aeronautics and Space Administration, Washington, D. C.
(March 1971)

3. Service to Small Communities, Parts I, II and III , Civil Aeronautics
Board. (March 1972)

4. 1970 Census of Population, Final Population Counts, Report No. PC(V1) ,
and General Population Characteristics, Report No. PC(V2) , U. S.
Department of Commerce, Bureau of Census, Washington, D. C.
(February 1971)

5. 1967 Census of Transportation, Vol. 1: National Travel Survey ,

U. S. Department of Commerce, Bureau of Census, Washington, D. C.
(July 1970)

6. 1972 Commercial Atlas & Marketing Guide, One Hundred and Third
Edition , Rand McNally & Company, Chicago, Illinois.

7. Airport Activity Statistics of Certificated Route Air Carriers , Civil
Aeronautics Board and Federal Aviation Administration, Department of
Transportation, Washington, D. C. (December 1969)

8. 1968, 1969, 1970 Origin-Destination Surveys of Airline Passenger
Traffic , Civil Aeronautics Board, Washington, D. C.

9. 1969 Origin- Destination Survey of Airline Passenger Traffic , Civil
Aeronautics Board, Washington, D. C.

10. Civil Aeronautics Board Economic Regulations, Part 298: Classifica-
tion and Exemption of Air Taxi Operators , Civil Aeronautics Board,
Washington, D. C. (April 1969)

1 1 . Federal Aviation Regulations, Vol. Ill, Part 23: Airworthiness
Standards - Normal, Utility, and Acrobatic Category Airplanes"
(November 1971); or Part 25: Airworthiness Standards - Transport
Category Airplanes (January 1972); Federal Aviation Administration,
Department of Transportation, Washington, D. C.

12 .

Federal Aviation Regulations, Vol. III, Part 135: Air Taxi Opera-
tors and Commercial Operators of Small Aircraft (October 1971);
or Vol. II, Part 121: Certification and Operations - Domestic, Flag
and Supplemental Air Carriers and Commercial Operators of Large
Aircraft (January 1972); Federal Aviation Administration, Department
of Transportation, Washington, D. C.

13. Aircraft Loan Guarantee Program, Public Laws 85-307, 87-820,
89-670, 90-568, U. S. Congress, Washington, D. C.

14. R. W. Bruce and H. M. Webb, Systems Evaluation of Low-Density
Air Transportation Concepts , The Aerospace Corporation,

NASA CR-114484, 1972.

NASA-Langley, 1912

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